The EURUSD rally has continued as expected and it is expected to continue (with minor corrections along the way of course). The USDJPY is testing the lower end of its range so watch for a break.
The EURUSD is sitting just above the level that we cited yesterday as potential resistance. We wrote that “1.5700/40 likely provides some resistance, which is a good area to lighten up on longs. Remember, there is the possibility that this rally will reach a new high within the next 3 to 4 weeks so longer term bulls should be patient.” There is no change to strategy here. Even if a larger correction is underway from 1.6018, then a test of 1.60 is possible, if not probable, because the drop from 1.6018 is in 3 waves. This would be wave A of a large flat and B waves of flats often retrace 100% of wave A. In summary, stay bullish (move risk to 1.5630) until further notice.
STRATEGY: Bullish, against 1.5630, target TBD
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There is no change to our USDJPY analysis. We remain bearish as long as the USDJPY is below 105.43. The potential for a sizeable decline in a 3rd of a 3rd wave within the bear cycle from 105.70 is what keeps us patient. This count remains favored but the alternate treats the consolidation since 105.70 as an X wave (probably will form into a triangle), which will lead to a new high in wave Z before the larger decline resumes. Move risk to 104.68
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STRATEGY: Bearish, against 104.68, target TBD
The reversal that we forecasted the last few days is underway. “It is likely then that a complex correction (W-X-Y) is unfolding since the 1/22 low at 1.9337. A bullish bias is warranted against 1.9362.” Cable is sitting at a resistance line but a break through would shift focus to 1.99/2.00.
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STRATEGY: Bullish, against 1.9452, target above 2.04
There is no change to the USDCHF pattern as the pair is tracking our preferred count. “We view the rally from .9674 as an A-B-C advance (corrective) but this does not mean that the larger downtrend is back underway (similar to the EURUSD). The advance may well be the first leg in a larger, more complex upward correction but a sizeable decline is expected regardless (probably into parity).” Risk can be moved to 1.0572
STRATEGY: Bearish, against 1.0572, target TBD
We had mentioned in recent days that “the decline is expected then to continue until measured support, which begins at .9945 and extends until .9841. The larger bullish bias is valid against .9710.” The pair is at the bottom of this zone, and the market has presented us with a high reward/risk bullish opportunity against .9710.
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STRATEGY: Bullish, against .9710, target above 1.0324
The rally from .8952 is wave C of a large 5th wave diagonal that could extend to a measured objective just below 1.00 in coming weeks (.9936). There is no reason to fade this trend as long as price is above the trendline shown on the chart above. Aggressive bulls can get bullish against .9556.
Kiwi has reversed in impressive fashion. The break through .7727 negates the near term bearish bias. There are 5 waves up from .7536 and a corrective decline to .7710, indicating with a high probability that the next leg up in the NZDUSD is underway. A bullish target is .7947 (100% extension).
STRATEGY: Bullish, against .7710, target .7915
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[1] STRATEGY is a summary of our best technical ideas. The ideas are subjective and are subject to change everyday although trades are typically held for at least a few days and sometimes a few weeks or more. Ideas are also included for crosses throughout the week; these are published at separate articles at DailyFX.